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The Dodd-Frank Act allows the Federal Housing Administration to propose its own qualified-mortgage rule, which governs lenders and ensures they establish a borrower's ability to pay back the mortgage. The rule also protects borrowers against predatory lending. "We're undertaking that process and will publish a proposed rule for comment in the near future," FHA spokesman Brian Sullivan said.

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Sens. Tim Johnson, D-S.D., and Mike Crapo, R-Idaho, unveiled a plan Monday designed to steady the finances of the Federal Housing Administration. Details in the discussion draft included stronger underwriting standards, better lender accountability and an overhaul of the reverse-mortgage program. Johnson, chairman of the Senate banking committee, has said the panel will prioritize an FHA bill before working on changes to Fannie Mae and Freddie Mac.

The Dodd-Frank Act allows the Federal Housing Administration to propose its own qualified-mortgage rule, which governs lenders and ensures they establish a borrower's ability to pay back the mortgage. The rule also protects borrowers against predatory lending. "We're undertaking that process and will publish a proposed rule for comment in the near future," FHA spokesman Brian Sullivan said.

The Federal Housing Administration says it will publish its own version of a rule issued by the Consumer Financial Protection Bureau that addresses a borrower's ability to repay a mortgage. The Dodd-Frank Act allows the FHA to devise its own qualified-mortgage rule. The agency says upcoming fee increases could disqualify FHA loans from the CFPB's definition.

The Federal Housing Administration will need a government bailout because it did not take into account the consequences of job losses and declining property values, U.S. lawmakers were told. New York University professor Andrew Caplin told a House panel that the FHA disregarded the risk presented by borrowers who were underwater but got refinancing through an FHA-backed mortgage.

Demand for loans backed by the Federal Housing Administration is surging. The loans do not require hefty down payments or stellar credit scores, and the amount people can borrow under the loans increased dramatically last year. "I don't know what we'd be doing without FHA," said Laura Triplett, a branch manager for SunTrust Mortgage.